Is it time to get out of China?

The Shanghai index hit a record high last week, but experts warn emerging markets could disappoint in 2007, and the bubble may even burst.

CHINA and other emerging markets have had a stellar start to the year, but some analysts fear the bubble could be about to burst.

Shanghai’s stock market hit a record high last week, powering through the $1,000 billion mark as investors snapped up shares in new issues. The Hong Kong, Singapore and Australian indexes also finished at all-time highs. The Chinese stock market has already gained 22% this year, after doubling in 2006.

Fidelity said last week that its China fund ballooned from £250m to £3 billion in 2006, such is the appetite among investors for access to the country’s seemingly unstoppa-ble growth. Its economy grew at nearly 11% last year, it was revealed last week, and is set to overtake Germany next year to become the world’s third-largest.

Investors have received good returns from emerging markets over the past four years. The FTSE All-Share is up 91.77% since 2003